World Monitor Mag WM_June 2018 web - Page 40

EXPERT OPINION Top 10 business risks facing mining and metals in 2017-2018 EY has issued its global research of the top business risks facing mining and metals companies every year over the past decade. In this article, we consider key highlights of the recent EY report Top 10 business risks facing mining and metals in 2017-2018. Here is the list of the 10 most critical risks that mining and metals companies have encountered recently. 1. Digital effectiveness (new) Victor Kovalenko, Climate Change and Sustainability Services Regional Director in Central Asia, Caucasus, Ukraine and Belarus, EY While the concept of digital mining is not new, there is a strong disconnect between the potential effect of digital transformation and actual implementation of new technologies by mining and metals companies. Today, technology advances faster than it can be adopted. Therefore, sector players need to be pragmatic when selecting and implementing digital enhancements while focusing on key business objectives, such as increased production and margins. 2. Competitive shareholder returns (new) Iurii Timonin, Manager, Climate Change and Sustainability services 38 world monitor The sector has consistently underperformed in terms of returns to shareholders in recent years. During the period under analysis, the allocation of capital was focused on returning cash to shareholders through dividends and share repurchases, rather than on investment in longer-term projects. Therefore, companies will have to strike a balance between investment in new projects ensuring sustainable growth and shareholder returns. 3. Cyber (9th in 2016) Cybersecurity is becoming increasingly important for mining and metals companies. With heavier investment in digital technologies and the penetration of IT solutions across nearly all business segments, cyber-attacks are becoming one of the top threats for industry players. Companies should adopt the approach that it is no longer “if” but “when” a cyber-attack will occur, and, therefore, accelerate investment in cybersecurity accordingly. 4. New world commodities (new) Continuous innovation and a focus on sustainability are having a major impact on future demand for commodities from the mining and metals sector. For example, the development of electric cars is driving demand for platinum, cobalt, lithium and other commodities, whereas increased adoption of renewables is putting serious pressure on the coal market. Companies need to continuously monitor changes in demand for commodities and regularly review their production project portfolios. 5. Regulatory risk (new) Regulatory risk has increased in the analyzed period as many governments demand a greater return from, and oversight of, their natural resources. Developed countries have implemented new laws aimed Bw&VFW"6ffVVBv627&V6V@vVW&&62FR6V7F"7V66&7V7F6W26W2VVBF